FAMILY MATTERS IN THE GREAT WEALTH TRANSFER
Discussing plans for an inheritance before the inevitable happens makes for a less stressful outcome.
Discussing plans for an inheritance before the inevitable happens makes for a less stressful outcome.
At kitchen tables and in boardrooms across the country, Australian families are starting to solve a multi-trillion-dollar puzzle: how to pass on wealth to the next generation.
As the country’s Baby Boomers begin to enjoy retirement and many step out of the day-to-day operations of their businesses, they have time to consider the legacies they want to leave and how to help their children and grandchildren thrive after they have passed.
Australian women look set to inherit a significant chunk of the nation’s wealth and will shoulder a big responsibility in managing it for future generations. A March 2024 report by JBWere projected that women will become managers of 65 percent of the $5 trillion that is set to change hands in coming years.
This trend is one part of the phenomenon known as the “oldest daughter effect,” or the tendency for daughters to take a leadership and decision-making role within families.
Former JBWere Australia chief executive Maria Lykouras says oldest daughters often take on caring responsibilities as parents age, and parents in turn rely on them to help preserve and manage their wealth.
“They want that legacy to be managed in a way similar to how they thought about it and for the purposes that were important to them,” she says.
“They see the eldest daughter as the trusted person in the family that will continue that legacy and will take care of the broader family finances for everyone else.”
No matter who wealth is being passed onto, it’s important for all families to prepare for this moment. If you’ve ever read an Agatha Christie murder mystery or watched the siblings of fictional media mogul Logan Roy battle over his legacy in Succession, you know the level of drama that can emerge through the inheritance process.
It can crystallise family values, but if done carelessly can cause undue confusion, anger and hurt for loved ones.
Here are three essential rules experts say will help smooth the transition of wealth while making sure the next generation is properly prepared for the responsibilities and opportunities that lie ahead.
Wealth managers agree that the single biggest mistake they see families make is leaving it too late to have detailed conversations about how the wealth transition will work for them.
“The last thing that you want is for you to pass away and then the money gets into the hands of the children, but the children either don’t know what the money was, they don’t know where it is, or there are multiple children and they are all vying for it,” Lykouras says.
KPMG’s global leader of family business, Robyn Langsford, said she has seen families where adult children are in their 40s and 50s yet their parents have still not communicated with them about how wealth will be distributed when they pass.
“If you are part of a pool of siblings in that age group and you don’t have transparency about where the ultimate ownership is going to end up, that can lead to a lot of anxiety and tension in the sibling group,” she says.
Managing partner at Integro Private Wealth, Justin Gilmour, spends significant time speaking to both the parents and children well ahead of a transition of assets to clarify the priorities of both groups.
“What I think happens a lot of the time is that there are assumptions made, and those assumptions are incorrect,” he says.
“There are not open and frank discussions early enough… That breeds resentment.”
In many family groups, not everyone will be receiving an equal slice of the family wealth.
Advisors see families factoring in a range of issues when dividing assets, including the independent wealth of adult children and their involvement in family businesses.
The key, however, is explaining the reasoning behind the division ahead of time.
“Where it is going to be unequal, that person needs to be proactive in communicating that fact and also the reasons they have come to that decision,” Langsford says.
“The worst thing you can have is some family member feeling like their father or mother loved them less … but actually [the decision] could be due to something completely different.”
“One child might have sacrificed a lot more to further the family’s wealth, for example.”
Now is also the time to discuss family values and how the next generation will manage the assets in line with these.
“Most importantly, have conversations around: What is the purpose of the family’s wealth? Do they want to give money to charity? What do they want to do with the business?” Lykouras says.
It’s also important to think about the formal structures around your plan.
Grant Thornton’s national head of family business consulting, Kirsten Taylor-Martin, says too often families develop a blueprint for how the younger generation will take control of assets, but the wills and estate plans of older parents do not allow for this in practice.
“What you find is that so many families don’t actually make sure all their legal documentation makes that happen,” Taylor-Martin says.
“The estate plan has to be a crucial step in your succession planning process to make sure your vision comes to life.”
It’s also possible to link a formal document like a family constitution, which is not legally binding but sets out a plan for how decisions will be made and what will happen to the family business if there is one.
In some families, writing constitution documents has helped clarify the path forward.
“What it has done is ended all of those assumptions. It basically preserves family relationships.”
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Amazon, Google, Microsoft and Meta pour billions into artificial intelligence, undeterred by DeepSeek’s rise
Tech giants projected tens of billions of dollars in increased investment this year and sent a stark message about their plans for AI: We’re just getting started.
The four biggest spenders on the data centers that power artificial-intelligence systems all said in recent days that they would jack up investments further in 2025 after record outlays last year. Microsoft , Google and Meta Platforms have projected combined capital expenditures of at least $215 billion for their current fiscal years, an annual increase of more than 45%.
Amazon.com didn’t provide a full-year estimate but indicated on Thursday that total capex across its businesses is on course to grow to more than $100 billion, and said most of the increase will be for AI.
Their comments in recent quarterly earnings reports showed the AI arms race is still gaining momentum despite investor anxiety over the impact of China’s DeepSeek and whether these big U.S. companies will sufficiently profit from their unprecedented spending spree.
Investors have been especially shaken that DeepSeek replicated much of the capability of leading American AI systems despite spending less money and using fewer and less-powerful chips, according to its Chinese developer. Leaders of the U.S. companies were unbowed , touting advances in their own technology and arguing that lower costs will make AI more affordable and grow the demand for their cloud computing services, which AI needs to operate.
“We think virtually every application that we know of today is going to be reinvented with AI inside of it,” Amazon Chief Executive Andy Jassy said on Thursday’s earnings call.
Here is a breakdown of each company’s plans:
Amazon said a measure of its capex that includes leased equipment rose to a record of about $26 billion in the final quarter of 2024 , driven by spending in its cloud-computing division on equipment for data centers that host AI applications. Executives projected it would maintain the fourth-quarter spending volume in 2025, meaning an annual total of more than $100 billion by that measure.
The company—which gets most of its revenue from e-commerce and most of its profit from cloud computing—also projected overall sales for the current quarter that missed analysts’ expectations. Its shares slid about 4% in after-hours trading Thursday. The stock rose more than 40% in 2024 and was up nearly 9% this year before its earnings report.
Jassy said AI has the potential to propel historic change and that Amazon wants to be a leader of that progress.
“AI represents for sure the biggest opportunity since cloud and probably the biggest technology shift and opportunity in business since the internet,” Jassy said.
Google shares are down about 7% since its earnings report Tuesday, which showed disappointing growth in its cloud-computing business. Still, parent-company Alphabet said it is accelerating investments in AI data centers as part of a surge in capital expenditures this year to about $75 billion, from $52.5 billion in 2024. The spending will go to infrastructure both for Google’s own use and for cloud-computing clients.
“I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down,” said CEO Sundar Pichai .
AI is “as big as it comes, and that’s why you’re seeing us invest to meet that moment,” he said.
Microsoft has said it plans to spend $80 billion on AI data centers in the fiscal year ending in June, and that spending would grow further next year , albeit at a slower pace.
Chief Executive Satya Nadella said AI will become much more extensively used , which he said is good news. “As AI becomes more efficient and accessible, we will see exponentially more demand,” Nadella said.
Growth for Microsoft’s cloud-computing business in the latest quarter also disappointed investors, leaving its stock down about 6% since its earnings report last week.
Meta, too, outlined a sizable increase in its investments driven by AI, including $60 billion to $65 billion in planned capital expenditures this year, roughly 70% higher than analysts had projected. Shares in Meta are up about 5% since its earnings report last week.
CEO Mark Zuckerberg said investing vast sums will enable it to adjust the technology as AI advances.
“That’s generally an advantage that we’re now going to be able to provide a higher quality of service than others who don’t necessarily have the business model to support it on a sustainable basis,” he said.
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